That doesn’t even really get around the flaw. It’s a band-aid which might help in the short-term. Even if the government pays to build you a new factory and subsidizes your labor force, unless the tariff is permanent and/or the government subsidies are permanent, your market share is still going to drop once the tariffs are removed or changed. And even if the tariffs and subsidies are promised to be permanent, you can’t rely on that.
You’re correct though the hope / theory is that by subsidizing the upfront expenditure of building a new factory it will eventually become cheaper to build domestically than to import foreign parts, such that the artificially boosted market share due to tariffs will persist even after tariffs are removed.
The flaw in that is that the cost of labor in countries like China, Mexico, Brazil and India is a significant factor as to why importation is cheaper. The cost of American labor is never going to be competitive against those countries unless the average worker accepts substantial concessions on standard of living.
That doesn’t even really get around the flaw. It’s a band-aid which might help in the short-term. Even if the government pays to build you a new factory and subsidizes your labor force, unless the tariff is permanent and/or the government subsidies are permanent, your market share is still going to drop once the tariffs are removed or changed. And even if the tariffs and subsidies are promised to be permanent, you can’t rely on that.
You’re correct though the hope / theory is that by subsidizing the upfront expenditure of building a new factory it will eventually become cheaper to build domestically than to import foreign parts, such that the artificially boosted market share due to tariffs will persist even after tariffs are removed.
The flaw in that is that the cost of labor in countries like China, Mexico, Brazil and India is a significant factor as to why importation is cheaper. The cost of American labor is never going to be competitive against those countries unless the average worker accepts substantial concessions on standard of living.